FALL • 2013
INSIDE: Eight Criteria
of Top Successful Brokers
Personal Mortgage Broker Corporations 2014 Trade Show River Rock Casino Resort
Keynote Speaker: Arlene Dickinson
PM #41297283
My reason
Daryl French
VERICO LendingMax Corp Member since 2009
“We decided to join VERICO because of the quality people; not only the leadership of VERICO but also the amazing mortgage professionals they have attracted to the VERICO Network. It was important to us that we maintain our unique look and feel while also having the ability to leverage relationships with some of the industry’s best. It was the right decision then and even more so today.”
Talk to us. You will be impressed.
VERICO remains Canada’s #1 Network for a reason. Talk to us and find out why. ®
1.866.983.7426 | info@verico.ca | www.verico.ca
My reason
Rishel Tomlinson
VERICO Custom Mortgages Member since 2011
“Being part of the VERICO Network has been especially valuable to my business when it comes to providing clients with strategic financing solutions for real estate located outside the Lower Mainland. By connecting with network members across the country on VERICO Talks, I can ensure even local credit union options are taken under consideration when recommending the best financing solution for our clients.”
V OL U M E
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I S S U E
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c o nten ts
In this issue: Publisher
Craig N. Brown
Art Director
Donna Szelest
Contributors
Karl Madsen Kate Ramsay Kevyn Oyhenart Samantha Gale Debbie Thomas Children’s Hospital Fred Sarkari
18 24
Photographers Unless specially credited, all photos were submitted or taken by staff. Advertising & BILLING Debra Hiller accounting@mbabc.ca 604.408.9989
features 20 Prohibitions on Charging Advance Fees and some Balanced Alternatives
THE bc mortgage broker is published in conjunction with THE MORTGAGE BROKERS ASSOCIATION OF BRITISH COLUMBIA
28 The Evolution of Mortgage Brokering in BC
26
34 Personal Mortgage Broker Corporations
38 Eight Criteria of Top Successful Brokers
columns
departments The bc mortgage broker ©2013. All rights reserved. The views expressed in The bc mortgage broker are those of the respective contributors and not necessarily those of the publishEr or staff. PUBLICATIONS MAIL AGREEMENT NO. 41297283. RETURN UNDELIVERABLE CANADIAN ADDRESSES TO: Suite 404, 999 Canada Place, Vancouver, BC V6C 3E2
9
2013 board of directors directory
7
message from the president
8
rePORT from the ceo
10 rePORT from the ethics chair
18 in the news 32 thank you to our advertisers
articles
42 mbabc new members
11 ERRORS AND OMISSIONS Risk prevention tips
14 WHY JOIN THE MBABC PRINTED IN CANADA.
6
MEMBERSHIP?
22 RELATIONSHIPS 24 A NOTE FROM BC CHILDREN’S HOSPITAL
26 2013 MBABC CHARITY GOLF TOURNAMENT HIGHLIGHTS
FALL • 2013 | the bc mortgage broker 5
me s s a ge
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F RO M
T H E
P R E S ID E N T
Educate
yourself to be a Better Broker
Ajay Soni, MBABC President
A
s I start my 26th year as a Mortgage Broker I had some time to reflect on the great brokers I have had the pleasure to work with. Time and time I see one consistent trait among these great brokers.
Great Mortgage Brokers educate themselves. It is that simple. These brokers are always attending networking events, lender presentations, and many of the industry sponsored education symposiums. They are always willing to learn. Not just about products but often by just networking with fellow industry professionals. They see and hear what their colleagues are doing and then adapt it for their own uses. They are also always willing to share ideas with others. In a nutshell they are educating themselves about what is happening in the market place. This education may be formal like an education or continuing education forum. It may be social such as the recent MBABC open house or it may just be at the various golf tournaments. The MBABC offers a selection of events for you to attend. We offer the Applied Information Course ( AIC ) for new brokers. We offer an annual golf tournament that is always a great day of networking. We also have our annual conference and trade show. It will be held in February of 2014 and promises to offer great education and networking opportunities.
Our industry members also offer many networking and social events. Lenders have parties and product sessions. Many lender and insurer representatives have free education offerings. Often they are on line. Finally, your own company may offer events that have educational opportunities.
I would encourage each and every one of you to make sure you attend events and get educated about your industry and profession. You will soon “Be a Better Broker”! Ajay Soni, President ajaysoni@telus.net
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FALL • 2013 | the bc mortgage broker 7
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F RO M
T H E
C E O
Regulating BANK ROAD
Representatives Samantha Gale, CEO MBABC & MBIBC
T
here has been a lot of discussion in Alberta and Ontario about whether bank mortgage representatives should be licensed as mortgage brokers under provincial mortgage broker legislation. This is primarily a result of legislative reviews which are being undertaken in both provinces and provide a window of opportunity for such a discussion. So what about British Columbia? What is the MBABC’s position on this subject? The more specific question we need to ask is, “should bank road representatives be “exempted” from mortgage broker licensing legislation because their employer, the bank, is exempted from the legislation and is regulated by the Office of the Superintendent of Financial Institutions (“OSFI”) and the Financial Consumer Agency of Canada (“FCAC”)?” We could start this analyses by asking the question about what the purpose of mortgage broker licensing is. What harms does it seek to prevent? As most industry members know, licensing requirements impose a bottom line standard of conduct on mortgage brokers, which helps ensure that they behave with full disclosure, represent the interests of a client as an agent or quasiagent, and act in accordance with a set of rules and ethical practices. If they fail at this, then potentially, they may experience the impact of the regulator’s iron fist. Mortgage brokers are in most cases, independent from the financial institutions in which they place a borrower’s mortgage. Their role is to shop for mortgages at different financial institutions and find the best deal for the borrower – this is what makes them an agent or a quasi-agent for the borrower. Mortgage brokers also have a clear and unequivocal duty to disclose conflicts of interest to clients. Most jurisdictions have forms which are intended to be used
for this purpose. This model of brokering contrasts starkly from that adopted by the bank road representative – this person is truly a salesperson whose goal it is to sell mortgages to customers using a mortgage shop model. A bank is clearly the quintessential mortgage shop. A mortgage is whipped off the shelf by the bank representative and the consumer can either say “yes please” or “no thank you”. However, I am aware of some cases, where the bank employee is unable to provide a mortgage to a customer, so the customer is referred to another arm of the bank, which may even utilize a trade name, which is completely different from that of the bank. These other bank representatives may source a mortgage for the client, which is not from the bank, but a completely separate lender, sometimes institutional but also possibly private. To make matters even more complicated, this bank representative may even perform this task by utilizing another middle person, who is a registered broker. I have seen a case in which an elderly fellow was looking for interim financing to buy a condo as he had not yet sold his home, which he had lived in all of his adult life. He had suffered from profound confusion as he held onto inches of paper relating to this financing. Somewhere in the midst of the paperwork was a document identifying a lender fee in the many thousands of dollars and an interest rate in the prevailing private B lending range. However, all this fellow knew was that he was supposed to be getting a mortgage from a bank, so it should be all right as he had an expectation of how things work at a bank. But he clearly did not understand the transaction, nor the myriad of entities and individuals involved in it, including the role of the bank representative who had met him at a coffee shop.
Perhaps the case above can demonstrate the perils of banks confusing their mortgage shop model of selling mortgages with the concept of mortgage brokers representing a borrower and acting in the borrower’s best interests. The two models of mortgage arranging, if juxtaposed, are clearly different and adhere to opposing principles, particularly in relation to the originator’s duty to the borrower. Here the bank was not acting as a fiduciary or fiduciary like agent to the borrower, who was confused and had no one acting in his interests. This is evidenced by the excessive private lending fee and interest rate which were far from competitive. Fortunately for this fellow, someone with a fiduciary like role stepped in to assist by getting him a mortgage at an A rate and nominal fee. However, the transaction was not like a traditional no fee bank mortgage, and no regulator was there to oversee it and ensure that the bank representative adhered to any rules or ethical standards. OSFI, we know provides prudential regulation of financial institutions to ensure their solvency, and the FCAC, while authorized to regulate certain conduct issues arising within financial institutions, does not impose any of the rules of conduct commonly found in most professional licensing regimes, on bank mortgage representatives. It is therefore in the interest of protecting consumers, that there be greater boundaries on the conduct of bank representatives. If bank representatives act like employees of a bank by seeing clients at the place of the bank’s business and facilitating mortgages with the bank, then yes, they should clearly be exempted from provincial mortgage brokering licensing requirements. However, if a bank representative acts like a mortgage broker in any of the following ways, then they clearly should not be Continued on page 15
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the bc mortgage broker | FALL • 2013
2 0 13
Ajay Soni, President
b o a r d
Jared Dreyer, Past President
o f
d i r ect o r s
Kevyn Oyhenart
|
di r e ctory
ST A F F Samantha Gale
604.272.1784 604.341.5798 cell 250.549.7283 fax koyhenart@shaw.ca
CEO samanthagale@mbabc.ca
604.681.7772 604.889.4349 cell 604.681.7773 fax bk05@shaw.ca
Troy Resvick
accounting@mbabc.ca
250.862.9504 250.215.3042 cell 250.861.2939 fax lhawkins@valleyfirst.com
Karl Madsen
Deenu Patel
Jason Suttie, Treasurer
Megan McDonald
604.868.0903 604.676.2663 ajaysoni@invis.ca
Deb White, Vice President 250.545.2202 250.549.7283 fax deb.w@telus.net
Loren Hawkins, Secretary
604.760.2247 604.294.9335 fax jsuttie@suttiemortgage.com
604.649.5991 x 201 604.539.3802 fax jared@dreyergroup.ca
Bruce Kahkesh
604.290.1219 604.677.5436 fax karl.madsen@shaw.ca 604.630.3653 604.351.7574 cell Megan.mcdonald@mcap.com
604.532.8769 604.677.5436 fax troyresvick@mortgageadvisors.ca 250.391.2933, x 30 250.885.2678 off 250.391.2985 fax deenu.patel@vericoselect.com
Kelly Curtis
250.744.5557 off 250.744.5577 fax kelly@mortgagedesigners.ca
Debra Hiller
Accounting / Member Services
Catherine Barry Manager of Operations
cbarry@mbabc.ca
MORTGAGE BROKERS ASSOCIATION OF BRITISH COLUMBIA 101-1765 8 West Avenue Vancouver, BC V6J 5C6 Direct :604.408.9989 Fax : 604.608.0977
TAILOR-MADE MORTGAGE SOLUTIONS • RESPONSIVE • FLEXIBLE • COMPETITIVE • 1ST AND 2ND MORTGAGES $500K–$10M • ACQUISITION • DEVELOPMENT • BRIDGE FINANCING SERVICING BC AND ALBERTA VANCOUVER: 604.608.2717 ∥ MARK SILVERWOOD ∥ MARIANNE DOBSLAW VICTORIA: 250.479.3999 ∥ LOCKIE MCKINNON ∥ RICK NICHOLSON TOLL FREE: 1.888.966.2717 BROKER INQUIRIES WELCOME
WWW.BANCORPFINANCIAL.COM FALL • 2013 | the bc mortgage broker 9
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E T HI C S
C HAIR
PUBLIC
Complaint Resolution Karl Madsen, MBABC Director
A
s many of you know, members of the public are welcome to contact the MBABC when they have complaints about a mortgage broker. When someone calls or emails the MBABC office to make a complaint against a mortgage broker an MBABC staff member speaks to the complainant to define the complaint, and note the relevant information. The next step is to check to see if the broker in question is a member of the MBABC. If not we have to let the complainant know the person is not a member and we probably cannot help with their complaint. If the broker is a member of the MBABC then someone from MBABC contacts the broker to explain that a complaint has been made, discusses it with the broker and asks the broker to respond. While brokers may initially resent a call from MBABC the process is usually very productive. Most complaints are fairly minor in nature and are easily resolved. With a little arbitration by MBABC a solution is proposed that can work for both parties. In fact for many complainants the mere fact that someone in authority has listened to them and presented their concerns to the broker on their behalf releases the stress they have built up and allows them to move on with no further action required. Contrast that to what often happens when the broker is not a member of MBABC and we cannot participate. A client who feels they did not have a chance to make their case may experience increased stress and even outrage. Now they really want someone to suffer! Since MBABC cannot assist they may move on to make their complaint with (for example) FICOM instead. While it may relate to a minor incident or a simple misunderstanding FICOM must still open a file and investigate a consumer complaint.
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the bc mortgage broker | FALL • 2013
The broker now feels stress because even with a relatively minor complaint no one likes to have a FICOM investigative file opened in their name. The eventual outcome may be benign but in the meantime both the broker involved and a FICOM investigator have to take the time to work through the complaint and usually review the file. And once a complaint is registered a FICOM investigator may ask to review additional files to determine if the broker is compliant in other areas as well. It is not a problem for most brokers but overall it is still time consuming and stressful. With FICOM’s heavy workload minor files may be low on an investigator’s list of priorities and so take several months to complete. Meanwhile the client has to wait for an outcome, all the while harbouring resentment and anger towards the broker in question. And the broker still has a little niggling worry in the back of their mind that somewhere there is a file open on them that remains unresolved. So the fact that MBABC can act as buffer or arbitrator to handle consumer complaints on behalf of a broker may save the broker from having to go through a FICOM investigation over a relatively minor complaint that could have been handled much more quickly and less stressfully for all concerned. At the very least allowing the client and broker to speak separately to a neutral party allows both to set aside some of the negative emotions that they may have built up prior to the complaint and thus come to an easier, fairer and faster resolution than a direct confrontation may have produced. In fact a client whose complaint is addressed this way may be satisfied that the broker did
the right thing and may even deal with that broker again in the future. Many brokers have never stopped to consider that MBABC’s ability to deal with public complaints against members is a benefit to brokers. And of course the public feels more comfortable dealing with mortgage brokers knowing there is a third party to turn to short of regulatory action if they are not satisfied with their broker. Even FICOM appreciates not having to get involved in low level complaints that would otherwise take up valuable investigative time when really the individual member of the public is often just looking for assistance rather than enforcement. Just another unsung benefit of MBABC membership.
a rticl e
Errors AND Omissions
Risk Prevention Tips
B
uilding a business and a reputation takes time and hard work. As a mortgage broker, one of the goals of your business is to deliver the best
service at the highest standard of care. However, things do not always go as planned and even the best of intentions may result in your business being held responsible for an error, omission or negligent act that may ultimately result in a costly claim or legal action.
RISK PREVENTION is key to helping you minimize your risk and protect your business. Consider the following suggestions to ensure that your risk of an Errors & Omissions (E&O) claim is minimized: • Review your written documents. Many E&O claims can potentially be avoided by spending adequate time reflecting on written agreements between yourself and your client. Ambiguity or lack of specific detail can be the cause of E&O claims. • Put things in writing. Always date and initial notes, and review your notes from meetings and telephone conversations with your clients to ensure you are both on the same page. • Comprehensive contracts. Use complete and detailed contracts to minimize risk and protect your business: 99Invest in developing a detailed and complete standard contract wording for your company and have it reviewed by a lawyer. 99In the event that you are asked to sign another party’s contract, have it reviewed by your legal representative to ensure you know all the implications of signing it. • If the terms being asked by the third party seem too onerous, be sure to carefully assess the cost of doing business with that client. • Research your potential clients. 99Get references from other vendors your clients use.
99Conduct a credit check. Pay specific attention to negotiations around contract requirements and payment terms. 99If you have concerns about a potential client, ask yourself if the cost of doing business may be higher than the value of the contract. • Licenses. Ensure you have all proper licenses in place (keep track of all staff license renewal dates) and ensure your company remains in compliance with your regulatory body. • Know your business associates. Know your appraisers, builders, lawyers, real estate agents etc. with whom you conduct business. • Handling complaints. 99Promptly handle any problems or complaints. 99Have a written complaints policy and procedure document that is acknowledged by all staff and employees. • Employee training. Develop a comprehensive employee training program. Ensure employees are familiar with the company’s ethical standards; outline directives as to their responsibility when they detect fraud; help employees understand the most current fraud schemes; conduct proper due diligence; and share information throughout the company. • Policies and procedures. Continually update your quality control policies and procedures. • Keep current. Attend seminars, workshops, and conventions which keep you up to date on fraud detection, new products, and other industry related items. • Fraud detection. To combat fraud - develop a mortgage screening check list to help identify potential red flags. • Don’t assume anything. This includes the assumption that you won’t get sued. Unfortunately E&O claims are becoming more commonplace. For example, a recent claim resulted from a mortgage broker obtaining loan documents from a prospective lender. The documents, Continued on page 12 FALL • 2013 | the bc mortgage broker 11
Continued from page 11
including bank statements and tax returns were forged. The borrower defaulted and the bank alleged the mortgage broker was negligent by not validating bank statements and other documents provided. This case has not been settled; but has the potential of costing over $300,000 plus legal defense costs. Remember that even if you follow the above guidelines, there is still a risk that you, your staff or business may be named in a claim. Errors & Omissions (E&O) Liability insurance will provide you with some protection; however it is vital that you regularly review your coverage levels and understand your E&O policy. If you don’t have such a policy, it is worth contacting a trusted insurance broker for more information. Contributed by: Kate Ramsay, Jones Brown Inc.
Flexible lending when you need it. At Antrim, being flexible allows us to create the custom mortgage solutions your clients require. We provide a broad range of residential 1st and 2nd mortgages tailored to the needs of your self-employed, stated income, and low beacon clients. Furthermore, a common sense lending approach allows us to approve and fund deals fast. Our friendly and knowledgeable underwriters look forward to helping you. 604.530.2301 · 1.888.550.6039 · applications@antriminvestments.com
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the bc mortgage broker | FALL • 2013
FINANCIAL LP
“With fast
approvals, Terri Butcher, Underwriter Angela Calla, Mortgage Broker, DLC Kristina Morrison, Account Manager
they make it
easy for me
and my team!”
“I find First National really great to work with – they’re always on my side.” At First National we’ve spent the last 25 years focused on delivering fast and outstanding service to you and your customers. And we’ll continue that commitment towards the next 25. Behind the scenes
Thank you mortgage brokers for 25 years of shared success.
ar t icle
WHY
Membership “Why bother with membership in the MBABC? I just don’t see the value in it.”
F
air enough. And I am sure in years past that may have been the case. But with recent developments both in the trade organization itself and within the Industry, I think it is more prudent now more than ever to become a member. I am going to do my best to lay it out for you why it is so important. First off, some of the value added benefits most offered at no extra cost and all negotiated on your behalf for your use: • Government relations and advocacy • Errors and discounted
omissions
insurance
• Networking and social events • In person and webinar based practical training programs • BC Broker magazine • Consumer website • Dental and Medical program offering • Job postings Those are some of the additional benefits that you can take advantage of. But what I really wanted to hit home on is a brand new program that some of you are not familiar with and have been given at no extra cost as part of your membership. That program is put out by DAS Canada and the Prolink Insurance group and has been in effect for some time. . I will break it down later for you but first a few points to ponder: • As an active Broker you are covered by some sort of Errors and Omissions insurance that protects against claims made by clients for inadequate work or negligent actions. • There is also MPP or another Life insurance program out there that allows you
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the bc mortgage broker | FALL • 2013
to offer life insurance to your clients that protect you from that aspect as well. • Do you know what an investigation from FICOM will cost? • Do you know what it can and possibly will do to your reputation as a Broker should you be investigated by FICOM? • Do you retain any sort of Counsel to phone when you have a question regarding automotive liability, family law or business tax protection? If you are at all curious to the previous points and questions pay attention to what I am about to write. An investigation from FICOM is all encompassing. They will request to see any file and or transaction in your history as a Broker. Ones that closed and you got paid on. Ones that didn’t close. Ones that you took an application and it never got any further than that. They will scour it all. You may be missing paperwork or consent for some of the things you had to do for the file. You may have filled out some of the forms wrong and disclosed that information to the clients misinforming them. You may have not asked enough questions and done your due diligence to protect the lender and the clients from any fraudulent activity. There may be possible fines and even have your license revoked. Can you afford that? How are you protecting yourself from that right now? What if I told you that for the cost of your membership you are covered for all the above scenarios as far as having a legal defense to represent you in similar situations? Peace of mind comes to light.
If you are interested in learning more about this program and what it offers contact one of your local directors and have them come out and give a quick 15 minute presentation on it. There are too many benefits to list here but I will give you some idea of what it is. • It will cover an insured person’s legal costs to defend their legal rights in relation to being prosecuted for a highway traffic or motor vehicle offence in connection with the ownership, use or operation of an automobile. • It will cover an insured person’s legal costs in respect of a tax appeal or a tax audit relating to their personal tax affairs. • It will cover an insured person’s legal costs in respect of an investigation or hearing brought against that insured person by FICOM provided the investigation or hearing relates to the activities of that insured person carried out in their professional capacity and as a member of you. • It will also provide any insured person access to a legal advice helpline through which they can receive confidential general legal advice and information over the phone relating to any legal or tax problem to help determine legal rights and options under the provincial laws of the applicable province and the federal laws of Canada. The advice lawyer cannot provide case specific research or review documents. Membership has its benefits as you can see. Contact the office today to either sign up or make an appointment to have a Director come give the presentation.
Kevyn Oyhenart, MBABC Director
r e p o rt
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Continued from page 8
exempted from requirements:
provincial
licensing
• Placing mortgages with lenders other than the bank who employs them, through referral, co-brokering or direct brokering; • Conducting mortgage brokering business in a name which is not the name of the financial institution which employs them; or • Acting as an independant contractor and not an employee of the bank, by conducting mortgage arranging activities outside of the bank’s place of business and not under the direct supervision of bank manager. The MBABC recommends that the registration exemption provisions of the Mortgage Brokers Act be amended to reflect the above requirements. This will clearly serve the public and help ensure that consumers are treated fairly by the mortgage industry.
Samantha Gale, CEO MBABC & MBIBC
TEAMWORK IS CENTRAL Michael A. (Mike) Christ, B.A., J.D., Member MBABC Serving Private Lenders & Financial Institutions Since 1984
CENTRAL CITY L AW
C O R P O R A T I O N
1139 Central City Mall - 10153 King George Blvd. Surrey, BC, V3T 2W1 T: 778-395-6588 F: 778-395-6589 mike@centralcitylaw.com
FALL • 2013 | the bc mortgage broker 15
Richard Earles
Business Development Manager 1-866-907-5407 richard@vwrcapital.com Twitter: @VWRCAPITALCORP
Your Private Mortgage Solution Funding Mortgages In: x x x x
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Your Underwriting Team: Dimitri Kosturos: VP Underwriting Richard Earles: Business Development Manager Leah Wilson: Underwriter
Send Deals To: info@vwrcapital.com Or Call:
www.vwrcapital.com 16
the bc mortgage broker | FALL • 2013
1-866-907-5407
News in the
A picture speaks a thousand words! The MBABC Open House and Mix and Mingle was a great success. Thank you for all those who came out to visit our new office location. We hope you enjoyed the cocktails, live music and award winning Indian cuisine. The warm evening provided a great opportunity to meet your current board members, mingle with industry professionals and hear a brief message from our new president Ajay Soni. Due to the overwhelmingly positive feedback we have decided to make the MBABC Open House an annual event. See you next year!
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the bc mortgage broker | FALL • 2013
Romspen Investment Corporation is a non-bank mortgage lender specializing in commercial real estate across Canada and the United States. With over $1 billion under administration, we offer customized mortgage solutions for term, bridge and construction financing from $4M to $100M.
Unlocking valUe often reqUires special keys. Blake Cassidy I 800 494 0389 I www.romspen.com
feat ure
Prohibitions on
Charging
Advance Fees and someBalanced Alternatives
T
he rules for taking broker or lender fees prior to mortgage funding on residential transactions (what I will refer to as ‘advance fees’) can be a somewhat challenging to understand. The rules relating to advance fees are contained in a piece of legislation called the Business Practices and Consumer Protection Act (the BPCPA).
Advance fees charged by anyone for arranging a residential mortgage are prohibited in the BPCPA. I make this conclusion from the following analyses. Section 5 prohibits mortgage brokers or lenders from engaging in deceptive acts or practices for transactions that are for primarily personal, family or household purposes. This is why advance fees are prohibited only for residential transactions and individual borrowers but not commercial transactions or corporate borrowers. In addition, section 4(3) makes it a deceptive act or practice for any mortgage broker or lender to arrange a mortgage for a fee, unless the fee is deducted from the mortgage advance at the time of closing. Under S. 8 of the Mortgage Brokers Act, the registrar of mortgage brokers may discipline a mortgage broker registrant for a breach of a provision of Part 2 of the BPCPA, which includes section 5. The result is that a registered mortgage broker or lender cannot take advance fees from clients for arranging residential mortgages, as fees can only be taken from the advance of mortgage funds at the time of mortgage funding. One of the rationales behind the prohibition against advance fees would be to protect the public from a fraud, in which a fraudster, usually with an anonymous email address, website or cellular telephone number, solicits vulnerable,
20 the bc mortgage broker | FALL • 2013
credit challenged people who seek funds, including mortgage funds. The fraudster then promises the mortgage funds to the vulnerable person in exchange for an advance fee, usually in the range of $500 to $2,000. The fraudster never funds the mortgage loan and keeps the advance fee. This kind of advance fee scam has been the subject of several cease and desist orders, which have been posted on the FICOM website since the registrar of mortgage brokers obtained administrative powers to issue cease and desist orders for unregistered activity. However, the problem with sections 4(3) and 5 of the BPCPC is that they are convoluted statutory prohibitions which define the taking of advance fees as a deceptive practice instead of simply prohibiting the activity. Additionally, these sections are exceptionally over reaching. The challenge for many mortgage brokers is that they may be reluctant to take on difficult residential mortgage clients, when their fee is contingent on their application actually being approved and funded. Often mortgage files require many hours of preparation, document management and negotiation. Sometimes mortgage commitments are obtained by mortgage brokers after they have invested significant amounts of time into the file, but the client may
®
In Alberta, section 71 of the Real Estate Act Rules places restrictions on the collection of an advance fee for assisting an individual in obtaining a mortgage from a lender. This Rule applies to a mortgage where the borrower is an individual who enters into a credit arrangement primarily for personal, family or household purposes. It prohibits collecting a fee from such an individual until the lender has provided written confirmation to fund the mortgage to the borrower, has provided an initial disclosure statement and at least two business days have passed since the disclosure statement was received (or the individual has waived the time period for its delivery in accordance with the Fair Trading Act). In Alberta then, mortgage brokers are entitled to charge fees in advance of mortgage funding if a mortgage commitment has been obtained and cost of credit disclosure rules are followed. There should be a balance between safe guarding the public interest from advance fee fraud and permitting an industry member to charge fees or collect a retainer for work performed on behalf of the client. The MBABC has therefore made recommendations to the Ministry of Finance that mortgage brokers should be entitled to collect advance fees for residential mortgage transactions so long as those funds are held in a trust account maintained by the mortgage broker, a lawyer or a notary, withdrawn in accordance with the terms of a Client Services Agreement and after the contractually agreed upon services of the mortgage broker have been performed.
Find out how we solve your mortgage requirements
Give us a call Tom Wollner 604.331.2210 tomw@peoplestrust.com
www.peoplestrust.com
• TW
ATING O BR
NT
E
Samantha Gale, CEO MBABC & MBIBC
vide o r P We ons! i t u l So
R VE
In addition, the MBABC has recommended that like mortgage brokers in Alberta, mortgage brokers in British Columbia should be permitted to take a fee at the time they provide a mortgage commitment to the client, provided that cost of credit disclosure rules have been followed. After all, harmonizing the advance fee rule in British Columbia with that in Alberta for mortgage brokers further assists in fulfilling the mandate of the New West Partnership and Trade Agreement and the Agreement on Internal Trade, which promotes labour mobility and harmonization between British Columbia and other provinces.
For over 25 years our common sense approach has been our hallmark
RS •
In Ontario, section 37(1) of the Mortgage Brokerages, Lenders and Administrators Act provides that “If the principal amount of a mortgage is $300,000 or less, a brokerage shall not require a borrower to make, and shall not accept, an advance payment or deposit for services to be rendered or expenses to be incurred by the brokerage or any other person.” Advance fees are therefore permitted to be charged by mortgage brokers in Ontario for residential mortgages with a principal sum of over $300,000.
INNOVATIVE SINGLE FAMILY LENDING
EA
All mortgage brokers who deal in residential mortgages are effectively prohibited from taking advance fees in order to assist in the prevention of a small number of fraudsters from taking advantage of the public. Most professionals, including lawyers, accountants and realtors are able by contract to negotiate advance fees. Lawyers, for example, commonly ask for a retainer of funds from a client, which are kept in their trust account and withdrawn only when the services and an account have been rendered.
CEL E
eventually opt for alternative financing or decline the offered financing – this can happen even at the last minute, just prior to closing. Under the wording of sections 4(3) and 5, mortgage brokers will have no way of collecting fees when there is never any mortgage funding from which to deduct the fee.
Y- F I V E Y
FALL • 2013 | the bc mortgage broker 21
ar t icle
Relationships T
he mortgage broker industry is about relationships – relationships with clients, referral partners, colleagues, BDMs, lenders and insurers. The two key relationships are the ones with clients and the ones with lend-
ers, via the underwriter. Working well with an underwriter means less stress and more satisfied clients.
The underwriter is your direct link to the lender, and you can’t work without them. Similarly, the underwriter needs your deals as well. Lenders are in the business of financing mortgages and needs its front line representatives to approve deals, and around it goes. So how do you develop a working relationship with an underwriter that is mutually beneficial? It starts by erasing the image that the underwriter is just sitting there waiting for your deal to come in. Understanding what’s happening at their end of the deal, and adjusting your approach, will make a huge difference. Of course, the underwriter must also be aware of your commitment to your client and the pressures you may be getting with regard to turnaround times, etc. First of all, remember that underwriters are working on 10 to 15 (or more) deals at a time, and during very busy times, will prioritize those deals in order of importance. Underwriters also have a process they follow when deals come in – this is something that brokers can’t change; however, underwriters should also be aware that slow turnaround times increase stress levels, not only in the broker, but for the clients as well. You can bridge the gap by communication. Sometimes the lender is waiting for the insurer. Other times, there may be something in the deal that raises a red flag. Underwriters want to be as efficient as they can because they do want to approve your deal.
22
the bc mortgage broker | FALL • 2013
Although you may not be able to get them to work faster, you can make sure your client knows the deal is being processed as quickly as possible, and you can set expectations. The other way to ensure the process moves quickly is to be very detailed in your submission notes so there are no misunderstandings. What sometimes happens is the documentation submitted has different information than what was on the application. The whole deal has to be reworked when everyone is under the gun. Being clear in an application, means less confusion and less back and forth between the broker and underwriter. Also, having all the documents up front gives the underwriter the complete picture so they only have to go through the process once. Brokers usually work with lenders who provide good service. Underwriters become familiar with their brokers and the way they work, so levels of trust build up between them. You can help the relationship by being up front about deals, allowing the underwriter to help make it work, if they can. Although at times a phone call may be easier with a more challenging deal, the preferred method to communicate is e-mail. A relationship is a two-way street – brokers want approvals from underwriters quickly but brokers also need to be good partners and ensure lenders get everything they need to make those fast decisions. Contributed By Debbie Thomas, TMG The Mortgage Broker
FINANCIAL LP
“They have
repeatedly shown us what
it means to go
Ranjit Minas, Underwriter Greg Martel, AMP Mortgage Expert, DLC Lyndsie Beale, Account Manager
above and
beyond.”
“Their turnaround time is incomparable to other lenders!” At First National, we’ve spent the last 25 years working hard to exceed brokers’ expectations, and we will continue that commitment towards the next 25. Behind the scenes
Thank you mortgage brokers for 25 years of shared success.
ar t icle
A Note
from BC
Children’s Hospital
M
oney raised through the Mortgage Brokers Association of BC’s annual golf tournament supports the hospital’s Excellence in Child Health Fund. The Excellence in Child Health Fund supports the most urgent needs of BC Children’s Hospital, its sister facility Sunny Hill Health Centre for Children, and the
Child & Family Research Institute.
The money required for the hospital’s day-to-day, operational needs are provided by the provincial government. The Mortgage Brokers Association of BC’s support of the Excellence in Child Health Fund helps to provide funding, over and above government support, to hospital areas to ensure BC’s children receive the absolute best care and benefit from the latest research and medical technologies. The three main areas supported by the fund are:
Childhood disease research The Child & Family Research Institute (CFRI) is one of the top institutes of its kind in North America. Every day over 200 scientists and researchers conduct specialized research into illnesses that affect children—cancer, cystic fibrosis, diabetes and rare genetic disorders—with the goal of finding better treatments and cures. The close relationship between the CFRI and the hospital enables researches to translate findings from their labs into treatments and new therapies that benefit children as quickly as possible.
The purchase of and/or upgrading to state-of-the-art medical equipment Equipment needs at BC Children’s Hospital and Sunny Hill are distinct from other hospitals. As facilities that serve patients from newborns to teenagers,
they require equipment that is equally diverse in size and type. Beyond the need to stock age and size appropriate equipment, our hospital must also frequently replace old and obsolete equipment with newer models. Modern equipment enables our caregivers to provide safer, more effective and more precise care. This helps to reduce the amount of pain a child experiences during a medical procedure, reduce risk and improve safety, among other benefits.
Sunny Hill’s specialized services Sunny Hill Health Centre For Children is the only facility of its kind in the province, serving children from birth to 19 years with developmental challenges and rehabilitation needs. Sunny Hill is part of BC Children’s Hospital. Many children seen at Sunny Hill also require care at the hospital. Sunny Hill caregivers—physical, occupational and recreational therapists—devise customized therapy and treatment plans to help each child achieve their maximum potential and best quality of life. Aided by specialized equipment, purchased with your support, they assess, diagnose and rehabilitate the children they see.
Clara Howorth, BC Children’s Hospital Patient
24
the bc mortgage broker | FALL • 2013
2013 MBABC
Charity Golf Tournament Spectacular greens, DRAMATIC scenery
World Class
COURSE &Resort... Those are the words we used to describe this year’s venue for our annual charity golf tourney we held on the 8th of September in beautiful Vernon and they didn’t disappoint! From the moment everyone arrived in the sunny Okanagan, they were treated to the world class service that put Predator Ridge and Sparkling Hill on the map. The day started off with a warm welcome from our MBABC staff, board members and capped off with a speech from Predator Ridge. From there our industry partners and players were shuttled out to their starting holes under beautiful blue skies to begin the 2013 tournament. The day was enjoyed by all. After the last putt, the participates had some time to relax and unwind from the day before heading up to Sparkling Hill for dinner and the rest of the evening festivities. The hotel continued on with the fabulous day by putting on a gourmet meal which I heard was the “best meal we’ve ever had at such an event”. As the evening carried on we heard from our title sponsor, First National, and our benefactor, BC Children’s Hospital before starting our live auction. The evening brought lots of laughs and tears, but most importantly we raised nearly $10,000 for the kids. Along with this event and previous years, we have donated approximately $135,000 since the beginning. Wow, what an accomplishment. On behalf of my fellow board members, association staff and our CEO, I would like to thank our industry partners and you, our members, for making this another great success. We hope to see you in 2014. Loren Hawkins, Golf Chair
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the bc mortgage broker | FALL • 2013
2013 golf tournament
September 09 predator ridge resort, vernon, bc
Thank you to all our sponsors
Notaries Public
THOMPSON VALLEY MORTGAGE CORP. W 10 0 5 H o l d i n g s L t d .
To Benefit
feat ure
The
Evolution of
Mortgage Brokering
M
in BC
ortgage brokers in British Columbia clearly make a remarkable contribution to the provincial economy. Canadians shared a total outstanding mortgage balance of over 1.1 trillion dollars in 2012, up significantly from the number in 2008, which sat at 858 billion1. If BC represents about one third of mortgage transactions across the country and mortgage brokers are responsible
for originating 25% of new residential mortgages, then we can see that BC mortgage brokers funded a 2
staggering 84 billion dollars of the total residential mortgage credit in BC.
It is true that mortgage brokers did not always enjoy such common place acceptance as financial intermediaries in the lives of Canadians. Back in the 1970s, the stereotype of the mortgage broker might be more aligned with that of a salesperson. The mortgage market place underwent a rapid transformation in this time period, starting with amendments to the Canada Bank Act in 1967. A six percent cap on interest rates which could be charged on residential mortgages by banks was eliminated in these amendments. Non-bank mortgage lenders were the primary mortgage lenders for the majority of Canadian households in the 1960s as the interest rate rose above 6%, pushing banks out almost completely out of the mortgage market. However, the 1967 Bank Act amendments eliminated the interest rate cap, which permitted banks to make conventional mortgage loans which were not insured. One of the most important mortgage innovations of the last century, was the implementation of mortgage default insurance by the federal government. In an effort to stimulate post World War II demand for housing, the government 28
the bc mortgage broker | FALL • 2013
enticed lenders to increase their participation in the mortgage market by reducing the risk of financial loss resulting from mortgage defaults. The program clearly drew a greater array of mortgage lenders into the mortgage market and expanded available mortgage credit to Canadians. In addition, rapid inflation towards the end of the 1960s changed the nature of mortgage lending practices. Inflation during this period is tied to increased consumer demand for goods, resulting in intensified competition for the supply of resources and available flow of capital. The squeeze on the money supply resulted in a correlating rise of interest rates, and long term lenders, who had previously enjoyed a steady period of relatively fluctuation free interest rates found themselves facing a serious risk that loans were committed at interest rates significantly below the cost to source the funds. Consequently, mortgage agreements began to change. Mortgages became partially amortized using terms, so that interest rates could ride the upward wave with repeated mortgage renewals. Partial amortization was a new concept which permitted borrowers to share the risks inherent in an inflationary economy with lenders. 1 Statistics Canada, Residential Mortgage Credit, last modified: 2013-08-30. 2 Maritz, Consumer Mindset, CAAMP 2013 Consumer Survey
These changes were only the beginning of an exponentially rapid evolution of the mortgage industry. While the development of modern land and mortgage law, emanating from Anglo-Saxon England, spans a good thousand years, current concepts of risk protection, payment plans, and mortgage options really only developed in the last forty or fifty years. It is amongst this backdrop of change, that the mortgage broker first appears in the lexicon of financial services discourse. There were now an array of options with different lenders, programs, and mortgage terms – the broker’s new niche role was to steer a client into the right option. However, at this time, the public by and large were still dealing with their banks and conventional lenders directly to facilitate mortgage loans. The mortgage broker’s primary role was to assist those clients with serious qualification challenges in finding alternative lenders – these were the clients given a clear rebuff by their bank. At this time, we find the mortgage broker characterized as an option of last resort for the “bottom of the barrel” clients. Regulatory oversight of mortgage brokers was implemented with the enactment of the Mortgage Brokers Act in 1972, which at the time was a most forward thinking and innovative See footnote reference 1
R e s i d e n t i a l 2008
m o r t g a g e
2009
2010
c r e d i t 2011
2012
$ Millions Total outstanding balances
858,031
921,568
984,911
1,058,466
1,132,232
Chartered banks
463,162
442,518
478,790
580,162
839,730
9,842
10,228
11,120
28,823
30,223
Life insurance company policy loans
15,336
15,343
14,360
14,860
15,121
Pension funds
15,309
15,649
14,361
13,360
12,703
National Housing Act mortgagebacked securities
189,494
273,908
301,526
236,987
41,231
Credit unions and caisses populaires
110,523
117,298
121,902
131,579
139,924
22,529
16,817
13,808
12,080
10,122
Trust and mortgage loan companies
Special purpose corporations (securitization)
Note: Figures may not add to totals due to rounding.
Un
fussy. In the world of banking, common sense has become surprisingly uncommon. Rules are piled on top of rules, making life harder than it needs to be for everybody. Well, that’s not how we operate. We strive to do right by our broker partners in a way that simply makes sense, like our Edge B mortgage program that offers solutions to customers without traditional credit backgrounds and are underserved by large banks. We’re Bridgewater Bank, and that’s just how we do things. bwballstarportal.ca
FALL • 2013 | the bc mortgage broker 29
piece of legislation. British Columbia was one of the first provinces to license mortgage brokers and to set exceedingly high standards for brokers with a comprehensive licensing course borrowed from the more mature real estate industry. In addition, the rise of associations have played a part in the development of the mortgage broker industry. The Mortgage Brokers Association of BC, the oldest broker association in Canada, was chartered in 1990, and developed a mortgage broker Code of Ethics and professional practice courses. Along with these developments, the role of mortgage brokers began to change significantly over time as lenders found it more economical and cost effective to originate mortgages through the broker channel. Mortgage brokers have truly transformed their role as the financing option of last resort to the option of first resort for approximately 30% of mortgage borrowers who utilize the broker’s negotiating power to find competitive mortgage terms and options. In a recent economics study3, it was found that mortgage brokers with their competitive advantage in obtaining lower rates saved consumers $15.89 million dollars in 2009. While this may not be a whopping number, it does have a tangible impact on the efficiency of the 3 Andrew T Williams, An Examination of the Canadian Mortgage Broker Industry, Acadia University, 2010
economy and provides clear cost saving benefits to consumers. However, the role of the mortgage broker is in the process of transformation yet again - this time from rate negotiator to trusted advisor. Mortgage brokers represent borrowers, and act as their agent to not only source the best mortgage but also to advise on alternative choices with a long term view of the client’s financial well being and needs. Mortgage brokers also have relationships with some lenders which the public would not ordinarily be able to access. They understand the lending strategy and requirements of various lenders and can assess the right fit for each client. OSFI’s (The Office of the Superintendent of Financial Institutions) new B20 guidelines have tightened up prudential underwriting criteria for federally regulated lenders (FRFI), such as banks and have made it more challenging for borrowers to obtain mortgage financing. The guidelines govern loans secured against residential properties, home equity lines of credit (HELOCs), and home equity loans. The B20 guidelines set out five fundamental principles required for residential mortgage underwriting: Principle 1: FRFIs that are engaged in residential mortgage underwriting and/or the acquisition of residential mortgage loan assets should have a comprehensive Residential Mortgage Underwriting Policy (RMUP). Residential mortgage practices and procedures of FRFIs should comply with their established RMUP. Principle 2: FRFIs should perform reasonable due diligence to record and assess the borrower’s identity, background and demonstrated willingness to service his/her debt obligations on a timely basis. Principle 3: FRFIs should adequately assess the borrower’s capacity to service his/her debt obligations on a timely basis. Principle 4: FRFIs should have sound collateral management and appraisal processes for the underlying mortgage properties. Principle 5: FRFIs should have effective credit and counterparty risk management practices and procedures that support residential mortgage and underwriting and loan asset portfolio management, including, as appropriate, mortgage insurance. Mortgage underwriting has undoubtedly become more complex as a result of B20. Loan approvals now require more extensive documentation, and banks have adopted their own unique policies which set out more strict approval criteria. While B20 may create extra hurdles for mortgage borrowers to jump through, there is now a correlating need for borrowers to obtain advice – advice from the mortgage broker. It is now not as easy for borrowers to obtain a quick mortgage approval from their bank, as they may not satisfy
30
the bc mortgage broker | FALL • 2013
the bank’s B20 qualification criteria. Borrowers may not know which alternative bank or mortgage lenders to go to if rejected by their own financial institution. A mortgage broker may therefore be more essential than ever for borrowers in today’s B20 underwriting climate. One of the goals of the MBABC is to support the mortgage broker in fulfilling his or her role as mortgage advisor by strengthening ethical and practice standards through the delivery of professional development education and practical courses. To this end, the MBABC has created the Mortgage Brokers Institute of BC, which delivers re-licensing education, and also post licensing courses for managers, broker owners and brokers. The 1972 Mortgage Brokers Act is also undergoing an overhaul by the Ministry of Finance, which will provide an opportunity to modernize the licensing regime. The MBABC also acts as an advocate of the industry and public by championing modern reforms, such as a greater role for the industry in its own regulation, the creation of personal mortgage broker corporations, and creating clearer guidelines for the charging of broker fees. Enhanced practice standards and a modernized licensing regime will undoubtedly further redefine the mortgage broker’s advisory role for property owners seeking mortgage planning and advice. The mortgage broker industry in BC has truly undergone a transformation from last resort lender, to prudent mortgage shopper and now mortgage advisor and planner. With mortgage brokers in BC having funded 84 billion dollars of current mortgage financing, they make a vitally important contribution to the BC economy. Samantha Gale, CEO MBABC & MBIBC
1992
.
.
Trusted Values for
20 Years
2012
Service Integrity Knowledge Looking for an industry partner to help your business run smoother? Let us help.
604.535.1494 Greater Vancouver . Sea To Sky Corridor ow and n Victoria & Nanaimo
FALL • 2013 | the bc mortgage broker 31
Thank You TO OUR
ADVERTISERS
Antrim Investments Ltd.
Granville West Group
Radius Financial
Armada Mortgage Corporation
Home Trust Company
RMG Mortgages
Bancorp Financial Services Inc.
Instafund Financial Services (2000)
Romspen Investment
Bridgewater Bank
Jones Brown Inc.
Canadian Western Trust
Lanyard Financial Corporation
Caplink Financial Corporation
Lawrenson Walker Realty Advisors
Central City Law Corporation Cove Mortgage Ltd. Dominion Lending Centres Equitable Bank First National Financial LP Fisgard Capital Corporation
32
the bc mortgage broker | FALL • 2013
The Society of Notaries Public of BC Street Capital Financial Corporation TD Canada Trust
Mandate National Mortgage Corporation
Vector Pacific Mortgage Corporation
Mortgage Architects
Verico Financial Group
Paradigm Mortgage Corporation
V.W.R. Capital Corp.
Peoples Trust Company
West Key Graphics Ltd.
SOLUTIONS. ADVICE. MOVE.
SMART
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RMG mortgages
Visit www.RMGmortgages.ca or contact one of our Business Development Managers to learn how RMG Mortgages can help you create homeownership opportunities.
feat ure
Why the
BC Industry NeedsPersonal Mortgage Broker
Corporations
M
any MBABC members have asked why submortgage brokers are unable to use personal mortgage broker corporations for tax savings strategies when other professionals such as realtors and lawyers are able to take advantage of professional corporations. The answer is simply that there are no legislative provisions
which permit mortgage brokers to create personal mortgage broker corporations.
The Mortgage Brokers Act (the Act) does not directly enable individual submortgage brokers to collect broker earnings through a corporation in order to split income for tax purposes or defer the payment of taxes. Submortgage broker is defined in Section 1 of the Act to mean “any person who, in British Columbia, actively engages in any of the things referred to in the definition of mortgage broker and is employed, either generally or in a particular case, by, or is a director or a partner of, a mortgage broker.� Submortgage 34
the bc mortgage broker | FALL • 2013
brokers are therefore employed by mortgage brokers, essentially meaning that they are employees, who must be natural persons with social insurance numbers and not corporations. However, the second part of the definition of submortgage broker contemplates that a submortgage broker may be a partner of a mortgage broker. Under common law in British Columbia, a partner of a mortgage broker may be a corporation - the Act thereby contemplates the registration of corporations as submortgage brokers. However, nearly all
relationships that submortgage brokers will have with their sponsoring mortgage broker will not be that of partner in a formal partnership arrangement, but rather the more traditional relationship of a mortgage broker employing a submortgage broker. In addition, there has not been a single corporation who is a partner of a mortgage broker, which has been registered as a submortgage broker. During the last ten years, franchising and co-brokering have been used as a strategies by some submortgage brokers to incorporate while also maintaining ties to a larger, well known mortgage brokers. Under this arrangement, the submortgage broker must incorporate a franchisee entity, set up a separate office, enter into a franchise arrangement and a co-brokering relationship with the franchisor entity and then register as a mortgage broker. The challenge for franchisees which operate as co-brokers with their franchisors is that the public may be confused about which mortgage broker entity they are dealing with, as the two mortgage broker entities may share part of the franchisor name and management operations, in addition to operating in close proximity to one another. Most professionals, such as doctors, dentists, lawyers, and realtors are able to incorporate professional corporations. The benefit to industry members is that a professional corporation enables them to take advantage of income splitting and tax deferral options.
The definition of submortgage broker should be amended by eliminating the option of corporations, who are partners of the mortgage broker, to obtain submortgage broker registration. This provision is clearly not relevant in today’s mortgage broker environment. However, the Act should be further amended to enable submortgage brokers to incorporate professional mortgage broker corporations which are capable of collecting and retaining broker fees and commissions owing to a submortgage broker from their mortgage broker. This provision would modernize the legislation and put submortgage brokers on the same footing as other professionals, such as realtors. Permitting brokers to do this would also provide a simpler and more transparent mechanism for mortgage brokers to utilize corporations for tax savings strategies than co-broking strategies which are sometimes utilized, and may create confusion for the public. The net benefit of permitting personal mortgage broker corporations is therefore twofold: enhanced consumer protection and the removal of economic barriers for mortgage brokers. The MBABC has therefore submitted recommendations to the Ministry of Finance that the Act be amended to permit submortgage brokers to incorporate personal mortgage broker corporations. Samantha Gale, CEO MBABC & MBIBC
Corporate tax deferral is an advantage for professional corporations as they will pay a lower tax rate on active business income, up to a single limit of $500,000, than their personal taxpaying counterparts. The professional can then defer the payment of corporate dividends to shareholders to maximize personal tax benefits. Income splitting is a clear advantage for professional corporations as the professional corporation can pay dividends to shareholders, such as spouses, children or affiliated corporations, who are at a lower tax rate than the professional. However, the incorporation of a professional corporation is only possible if it is provided for in the professions’ governing legislation. Amendments to the Real Estate Services Act were introduced in 2009, which permit licensed real estate professionals to incorporate personal real estate corporations. Remuneration paid to a real estate professional may be paid directly to his or her personal corporation, and then payment of fees or dividends may be paid from the personal corporation to the professional. The personal real estate corporation may only provide real estate services by the licensed professional and cannot avoid regulatory liability. In addition, under the Regulations, voting shares may only be issued to a licensed professional. FALL • 2013 | the bc mortgage broker 35
CLOSE MORE DEALS WITH INSTAFUND’S FAST, PERSONAL BROKER SERVICE.
For over 30 years InstaFund has been funding equity mortgages with the help of mortgage brokers like you. We are known for our fast quotes, simple application process and firm commitments. Contact Adam Korbin or Chris Delisle for a quote on your client’s application. akorbin@instafund.com or cdelisle@instafund.com 604.687.2020 InstaFund.com
InstaFund Financial Services (2000) Ltd
FALL • 2013 | the bc mortgage broker 37
feat ure
Eight Criteria
Successful Brokers of Top
S
o why do some brokers succeed and others make the rest look incompetent? After working in this industry for over 10 years, I have discovered the common threads that make a broker successful. The following list captures the critical elements consistent with successful brokers, no matter what the economy is facing.
Success Criteria # 1: Focus on a niche market Many people fail because they try to please everyone. The average broker will react to anyone and everyone that comes their way. The successful brokers are specialized in who they focus around. Generalized professionals are rarely as respected or well paid. Consider the medical profession. A general practitioner is a dime a dozen and makes far less money than an exclusive specialist. Other then all the obvious reasons to focus on a niche, working outside a niche weakens our brand. Having a niche helps us create a brand, which gives us a unique reputation. It is this reputation that will have clients come calling, even in depressed economic periods. Why is a niche so important? By establishing a niche, we are setting ourselves apart from our competition. We are classifying ourselves as experts.
Success Criteria #2: Connect with your community People get the wrong idea when I mention connecting with your community. Most brokers are already networking, but that’s not really what this criterion is about. Connecting with the community is not about throwing around business cards and getting your name out there; it is about giving back. When you get involved with your community, you become part of their family. You experience moments together and create a story line. This kind of marketing and branding cannot be paid for; it is priceless.
38
the bc mortgage broker | FALL • 2013
There are many brokers out there. You have a better chance of being remembered as the person who shared an experience together, creating an emotional connection.
Success Criteria #3: Everything you do leads to referrals Everyone knows what a referral is, but very few people seem to understand the benefits of a referral. A referral is nothing more than word of mouth advertising in which potential clients learn about your service through a third party. A referral system is a process that is designed to enhance your chances of getting a referral. Every top broker has a system in place to increase their chances of receiving referrals. To build your own referral system, keep these steps in mind. 1. Ask at the right moment. At the end of a successful sale, clients are usually very happy. 2. Ask more than once. Most brokers forget that other people do not always think about business. Clients have many other things in their lives so it can be easy to forget about a positive experience with their broker. However, a good broker
Achieve
will maintain contact with clients, allowing them opportunities to keep asking for referrals without seeming pushy.
YOUR TRUe
3. Form relationships. In business, it can be easy to keep things impersonal. However, the best way to get a referral is to get a friend first.
BUYiNG
4. Ask the right way. Asking for a referral can put clients on the spot, which many people find disconcerting. Instead of asking, “Do you know anyone who needs a broker?” try easing into it more. It might be better to say, “I really like dealing with you. Do you have any friends with the same energy? I’d love to work with them, too.”
POWeR ThROUGh
Success Criteria #4: Systemize your entire business I don’t care what kind of work you do, it most likely has a lot of repetition. This is why I advocate systemizing your entire business. It is quite a hard thing to do for most people because it requires you to look at your process with fresh eyes. You have to be able to see where you’re being inefficient, and put a system in place to erase it.
cONSOLiDATiON
Break down every process in your business and ask yourself, “Why are we doing it this way?” Systemization starts with understanding the intent in your actions. What you will find is most things that you do can be streamlined. Systemization will take you from being busy to being effective. The top 5% of the brokers do 40% of the work the average broker does but they make 80% more.
Success Criteria #5: Care for people At first glance, you may think you have this one covered. After all, you care about people. You make connections with your customers because you want their business. However, that’s not what this criterion is about. In order to be truly successful, you need to stop thinking of clients and focus on people. Clients can help us make money, but people make our lives meaningful. The above average broker is merely an expert in their industry. Top 5% of brokers are experts on people. Truly care about people without putting monetary value to them and you will find others will go out of their way to help you be successful.
ONE STOP, ONE S
Success Criteria #6: Stop marketing and start branding
ONE STOP, ONE SOURCE
Everyone knows that marketing is important. However, very few people really understand what effective marketing is. Good marketing is about touching the hearts and minds of people who need your product.
In effect, modern marketing is about branding. Branding is not the same as marketing. Branding is how you define yourself to customers. It is about differentiating who you are and what you do. All of your marketing should reflect your brand. Essentially, your brand is the emotion people feel every time they connect with you or your business on any level. A brand is not just about recognition; it is also about trust. People trust companies with an established brand because they know what to expect.
A DiviSiON OF
While developing your brand, here are a few things to keep in mind. 1. What do you want to be known for – your Brand?
PRiNT . LABeLS . FORMS
2. Make sure every part of your business reflects your brand.
1.800.661. 9952
Ultimately, branding is the guiding force behind a successful business. So whatever your brand is, it has to be consistent to every aspect of your business. Continued on next page
centralforms.com
FALL • 2013 | the bc mortgage broker 39
Continued from previous page
Success Criteria #7: Stop selling and start educating people The average broker focuses on selling, but the best brokers focus on educating. Clients don’t want to listen to a sales pitch; they want to learn about how to make the right choice. When you try to teach them, they are more open to working with you. People want to deal with experts. Clients don’t want a weekend warrior to help them make the most expensive investment of their lives. People think they know everything a broker does, but the truth is, we possess unique knowledge that does make us experts. It is our job, therefore, to share that knowledge and teach our clients about the process.
So choose one thing right now. Pick one idea that stuck out to you. Find one tip that you would like to develop. Write it down and spend the next five minutes deciding how you will implement this in your daily life. This is what will set you apart. Fred Sarkari is a Licensed Psychotherapist and a best selling author with a background in Human Engagement. He has trained and coached within this industry for over a decade. www.FredSarkari.com www.Facebook.com/FredSarkari
Success Criteria #8: Implement change After all the tips and advice presented in this document, there is one criterion left. Simply put, the last factor to guarantee success is taking the knowledge and applying it to your business. The best brokers, those who perform in the top 5%, will latch onto some of these ideas and find ways to practically implement them into their business practices. The rest will think about how useful these tips are and then continue on with their day.
JOIN US!
AND BE A PART OF NEXT YEARS CONFERENCE
National · albert.collu@mtgarc.ca · 289.466.5197 Western Canada · meini.ickert@mtgarc.ca · 604.970.8650 © Copyright 2013, Mor tgage Architects Inc., all rights reserved.
40
the bc mortgage broker | FALL • 2013
Committed to Excellent Service We specialize in working with Business-For-Self, new immigrants and credit-challenged clients. Call us today! Ian Silvester Manager, Residential Mortgages, (B.C.) T 604-561-4966 E isilvester@eqbank.ca Tim Wachter Manager, Business Development, (Western Canada) T 403-470-4434 Toll Free 1-866-940-1201 E twachter@eqbank.ca www.equitablebank.ca
The perfect tool for any problem… in one convenient package. Extraordinary brokers with extraordinary clients need an extraordinary lender. No two files are the same so we take a multi-faceted approach to helping you solve your clients’ unique financing challenges. • 1st and 2nd Mortgages • British Columbia, Alberta, Saskatchewan, Manitoba • Residential, Commercial, Construction, Rental Grant Plunkie
Ryan Lee
Business Development / Senior Underwriter
Relationship Manager
Let’s talk solutions. Find out how Paradigm can help find alternative lending solutions for your clients Call 1-800-979-2911 or visit paradigmmortgage.ca FALL • 2013 | the bc mortgage broker 41
welcome New MEMBERS WELCOME
FIRST NAME
new members
LAST NAME
COMPANY
nicole Membership apps Corporate
verico select Mortgage Corp.
Custom Mortgages Rathwal eal Estate Financing Ltd. gurjinder
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Rishel
Tomlinson
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Lili
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Fountainhead Corp. gordon Capital Beynon
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invis inc.
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Sinvis pin Mortgage Corp. inc.
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